Puncak Niaga - OUTPERFORM - 30 May 2012

Date: 
2012-05-30
Firm: 
KENANGA
Stock: 
PUNCAK
Price Target: 
3.01
Price Call: 
BUY
Last Price: 
0.23
Upside/Downside: 
+2.78 (1208.70%)

Period   1Q12

Actual vs.  Expectations
1Q12 results above expectations due to margin improvement across the division and contribution of its new income stream ie: oil and gas.

1Q12 net profit of RM68.4m made up 38% and 55% of our full year FY12 and consensus' forecasts, respectively.  

Dividends  No dividend declared during the quarter.

Key Result Highlights
QoQ net profit improved significantly from RM8.7m to RM68.4m on the back of 20% drop in revenue. This is mainly due the negative impact to its P&L when Puncak adopted IC12 in FY11. However, the margin in 1Q12 has improved throughout all divisions coupled with progressing earning recognition for its construction contract ie: rural water supply project. 

YoY revenue grew by 36% backed by 32% increase in water distribution division due to increase in water tariff and short of oil and gas contribution in 1Q11. The KGL and GOM acquisition was fully completed in 2H11. The net profit has also improved significantly from loss of RM8.1m in 1Q11. 

We expect the achievement in 1Q12 results is sustainable throughout FY12. 

Outlook  The Oil and Gas division remained as the key rerating catalyst for Puncak which could surprise on the upside in terms of the size of order book replenishment in FY12 ie: >RM550m.

We expect more meaningful negotiation between SSG and Puncak on water assets consolidation post-election. 

Change to Forecasts
We tweaked our FY12E and FY13E net profit higher by 29% and 25%, respectively. We fine tuned our assumption on oil and gas order book assumption higher from RM300m to RM550m for the next 2 years. 

Rating  MAINTAIN OUTPEFORM

Maintain OUTPEFORM recommendation with higher Target Price of RM3.01 (RM2.70 previously) based on SOP valuation.

Valuation   We raise our target price higher to RM3.01 based on SOP valuation.

Risks  Prolonged water consolidation issues  

Source: Kenanga
Discussions
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SEGAMAT66

go go ,value should be higher

2012-06-02 00:01

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